County, towns owe tax money for overpayment
CENTREVILLE — The Queen Anne’s County government owes the state of Maryland $688,718, as a result of the state overpaying tax money to the county in past years.
A state audit caught the error, involving municipalities throughout the state.
Some towns in Queen Anne’s County also owe tax money to the state while others were short changed tax money and got refunds. The town of Centreville got back $683,000, which will be put into reserve for emergencies, according to a town official.
A list of the other affected towns in Queen Anne’s County: • Church Hill got back $50,168 • Barclay got back $5,300 • Queenstown owes $17,920 • Sudlersville owes $16,145 • Millington got back $8,245 The towns of Templeville and Queen Anne also owe the state tax money that was over distributed to them. Figures for those towns weren’t available.
An independent audit commissioned by Comptroller Peter Franchot for tax years 2010 to 2014 identified the discrepancies in local income tax revenue.
The comptroller office has announced that the municipalities don’t have to start paying it back until 2024 and then are allowed to pay it back over 10 years.
Even when the county pays back the money, it shouldn’t affect county services since it’s paid over a 10-year period, said Jonathan Seeman, director of Budget, Finance, and Information Technology.
Also, the county’s total annual budget is $129 million, which shouldn’t be affected by the amount owed, he said.
However, the county will take in less tax money since it’s been adjusted, but still Seeman doesn’t see a big impact.
In Centreville’s case, the town got back money. George “Smokey” Sigler, council president, said the money will be put into reserve for emergencies. There are no plans right now to spend it.
Queenstown was recently notified it owes money, but the town commissioners’ lawyer Brynja McDivitt Booth has recommended the commissioners take no action. She said the statute of limitations may have run out, and the state may have other options to cover the amount.
So far, the town commissioners have taken no action.
None of the other towns have announced if and when they will pay back the money, if owed. The town of Queen Anne hasn’t been notified at all about it, said Mayor Randy Esty.
Mar yland Comptroller Peter Franchot supposedly told the towns last month about it.
In a Nov. 16 letter to leaders of each affected jurisdiction, Franchot wrote that the comptroller’s office became aware of some issues concerning a small number of local income tax distributions for localities in Montgomery County in tax years 2010 to 2014, resulting from limitations of the office’s 30-year-old tax system.
Franchot wrote that the mistakes were “unintended consequences of our transition from paper to predominantly electronic filing, and inaccurate taxpayer information.”
Discovery of these issues prompted Franchot to launch an initial internal investigation, which led to a third-party, independent statewide audit. This recently completed audit revealed that 0.1 percent of the total local income tax revenue processed during that period had a statewide impact.
According to the comptroller’s office, an independent audit identified discrepancies with $12.7 million out of the $14.9 billion in local income tax revenue it processed for tax years 2010 through 2014.
Within the five-county Mid-Shore area, 15 towns received checks while 18 will have up to 17 years, beginning in 2024, to pay back the money, interest-free, to the state.
Millington, which straddles Kent and Queen Anne’s Counties, was the only town that received both too much and too little money. It has a net refund of $8,245 that probably will be used for street repairs, “or it will be added to the little pot of street repairs,” Town Administrator Jo Manning said.
Manning, who is also administrator of nearby Sudlersville, copied her emails to the town commissioners that the small town with a population of 500 owes $16,145 to the state.